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Old 06-30-07, 07:46 AM   #1
phantomcow2
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Non profit board of directors

Does the board of directors, for a non profit organization, have authority of what the executive director does? For example, if hte board decides that an employee needs to be terminated, the director must do it? Or if the board demands that so and so be paid, the director must pay that person?
If the director commits acts of fraud, in that he/she does not pay payroll taxes for several months and does not inform the board of directors about the IRS's threats of personal liability, is this against some law?
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Old 06-30-07, 08:12 AM   #2
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Originally Posted by phantomcow2
Does the board of directors, for a non profit organization, have authority of what the executive director does? For example, if hte board decides that an employee needs to be terminated, the director must do it? Or if the board demands that so and so be paid, the director must pay that person?
If the director commits acts of fraud, in that he/she does not pay payroll taxes for several months and does not inform the board of directors about the IRS's threats of personal liability, is this against some law?

My Wife is an Administrator at a non-profit assisted living home. The board of Dirs. does not have control of day to day operations. The Admin takes care of that. Monthly board meetings are basically a numbers report. The Admin. job is to oversee the Managers of different depts. and to fill the beds. The second in command is the Director of Nurses and one always has to be on duty. A Manager of Housekeeping, for example, can be the D.O.N. for a given day. A nurse is always on duty though. The Administrator's Assistant is usually in total control of the operation of the office. The Asst. is the one managers go to for their needs. Hope this helps.
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Old 06-30-07, 09:06 PM   #3
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I'm involved in a non-profit, 503C, board of directors, and we do have such powers. Check the board's by-laws, it should all be spelled out in there.
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Old 07-01-07, 07:15 PM   #4
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Well basically, I know some folks who are in a bit of a pickle jar. They're members of a board, with a pretty crazy director. She is very creative, but NOT a business lady by any means. Apparently she has not been paying payroll taxes since october, and the IRS is getting cranky. This of course happened, without the knowledge of the board. Turns out that those on the board are personally liable for the money owed IF the organization cannot muster it up.
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Old 07-02-07, 06:30 AM   #5
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The Board hires and fires the CEO (director) and sets major policy for the organization. If the director fails to follow the Board's policy directions, or commits unlawful acts, then the Board has a fiduciary duty to the organization to fire the director.
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Old 07-02-07, 06:48 AM   #6
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The Board hires and fires the CEO (director) and sets major policy for the organization. If the director fails to follow the Board's policy directions, or commits unlawful acts, then the Board has a fiduciary duty to the organization to fire the director.
Plus a moral duty to the organization and each other (who are on the hook, apparently, for the back taxes, plus penalties the IRS loves to levy) to file any appropriate charges against her. If she's just incompetent, they fire her. If she's doing something illegal with that money, like funneling it out of the company....
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Old 07-02-07, 08:08 AM   #7
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Yeah - board of directors usually have quite a bit of liability. They're written into the official charter submitted for that 503c designation. If the director is incompetant they need to fire her immediately to protect themselves.
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Old 07-02-07, 12:39 PM   #8
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The ED has top be fired just as soon as the Board can convene an emergency meeting pursuant to the bylaws and state law. This cannot wait.

Generally speaking, a Board of Directors is the Executive Director's boss. The rule of thumb is that Boards set policy, ED's run the organization on a day-to-day basis. Depending on the size of the organization, the Board hires and fires the ED and maybe a few other senior staff, but most hiring and firing decisions should be left to the ED. Even the senior staff hire-fire decisions that a Board reserves to itself should not be made without recommendations from either the ED or a Board committee set up for the purpose. That doesn't mean that a Board can't order an ED to hire or fire someone lower down the food chain (unless the bylaws say they can't), but as a practical matter, an organization that has its Board making general employment decisions is not using its human resources to best advantage. Boards should be focusing on broader issues of policy, strategic planning, fund raising, and the like.

As for the personal liability of the Board members for delinquent taxes, that alone is reason for the ED to be gone. Now.

Next, the Board needs to figure out a response to the IRS, hopefully including a payment plan. (For that, they should bite the bullet and hire a good tax attorney experienced in this sort of matter.) It seems to me that this is very time sensitive if the Board wants to convince3 the IRS that they had nothing to do with the malfeasance.

I wish them good luck.

Oh, did I mention that the ED needs to be shown the door? Oh, I did. Good.
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Old 07-02-07, 12:43 PM   #9
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Generally speaking, a Board of Directors is the Executive Director's boss. The rule of thumb is that Boards set policy, ED's run the organization on a day-to-day basis.
That pretty much sums it up. The Board sets the goals & results they want to achieve. The ED figures out the path it takes to get there and manages the steps daily to ensure they're on the right track.
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